Multiple Choice
Identify the choice that best
completes the statement or answers the question.
|
| |
1. |
The homeowner can’t make
payments on the mortgage and the lender takes the property:
|
a. |
Delinquency |
c. |
Repossession |
|
b. |
Surrender of
collateral |
d. |
Foreclosure |
|
| |
2. |
Property that is personal
and that can be easily moved is categorized as
|
a. |
business property. |
c. |
personal property. |
|
b. |
none of the
above |
d. |
real
property. |
|
| |
3. |
The main difference
between debit and credit cards is:
|
a. |
A
debit card requires that you have the cash available in the account;
a credit card doesn’t |
c. |
A
credit card has the Visa or MasterCard logo; a debit card
doesn’t |
|
b. |
A debit card
does not offer the same protections as a credit
card. |
d. |
A credit card
requires that you have the cash available in the account; a debit
card doesn’t |
|
| |
4. |
Which is not true about
investments:
|
a. |
Always invest only for tax savings
purposes. |
c. |
Never invest using borrowed
money. |
|
b. |
Never invest
only for tax savings purposes. |
d. |
Diversification will help lower the
risk. |
|
| |
5. |
Your piece of ownership
in a company is called:
|
a. |
Dividend |
c. |
Profit |
|
b. |
Portion |
d. |
Share of
stock |
|
| |
6. |
The primary difference
between the Roth IRA and a traditional IRA is:
|
a. |
A
traditional IRA grows tax free; the Roth IRA
doesn’t. |
c. |
The Roth IRA grows tax free; the traditional
IRA doesn’t. |
|
b. |
Contributions
to your Roth are pre-tax; contributions to a traditional IRA are
after-tax. |
d. |
The IRA allows
a contribution amount of $5,500 for non-income producing spouses;
the Roth IRA doesn’t. |
|
| |
7. |
Which type of insurance
is provided by employer’s for work-related illnesses?
|
a. |
long-term disability |
c. |
short-term disability |
|
b. |
none of the
above |
d. |
worker’s
compensation |
|
| |
8. |
The key to building
wealth is:
|
a. |
Staying debt free |
c. |
Fixed rate, 15 year
mortgages |
|
b. |
A good
education and income |
d. |
Driving
reliable used cars |
|
| |
9. |
An overdue payment is
called:
|
a. |
Delinquency |
c. |
Repossession |
|
b. |
Foreclosure |
d. |
Surrender of
collateral |
|
| |
10. |
Which is an advantage of
taking a 15-year mortgage vs. a 30-year mortgage?
|
a. |
There is a tax advantage with a 15-year
mortgage. |
c. |
The monthly payments are slightly
higher. |
|
b. |
The monthly
payments are lower. |
d. |
The difference
you save in interest is
significant. |
|
| |
11. |
Which of the following is
true about using credit:
|
a. |
When using credit, one spends
more. |
c. |
Using credit neurologically registers as
pain. |
|
b. |
It’s the same
as using cash. |
d. |
When using
credit, one spends less. |
|
| |
12. |
Which of not a precaution
to prevent your identity from being stolen?
|
a. |
Never buy anything on the internet if you
are using a public internet cafe. |
c. |
Shred all documents that contain account
information. |
|
b. |
Create
passwords that have a combination of letters, numbers and
characters. |
d. |
Keep you
Social Security card on you at all
times. |
|
| |
13. |
What is a key feature in
computing your FICO score?
|
a. |
Debt |
c. |
How much money you have in
savings |
|
b. |
Your annual
gross income |
d. |
All of the
above |
|
| |
14. |
What is true about
investing in single stocks?
|
a. |
The risk is the same whether you invest in
mutual funds or stocks. |
c. |
There is a low degree of
risk. |
|
b. |
If the stock
is from your employer, the risk is lower. |
d. |
There is a
high degree of risk. |
|
|
|
15. |
Julie works full-time and
is finishing college so she can be a teacher. What housing option
would be best for her based on this information?
|
| |
16. |
What is the problem with
using credit cards if you pay your balance off each month?
|
a. |
This is the only responsible used of
credit. |
c. |
Both b and c |
|
b. |
You are more
apt to buy on impulse rather than thinking about a
purchase |
d. |
You are
spending an average of 12-18% more when you use a credit
card. |
|
|
|
17. |
Gregg travels out of town
frequently for his sales job. He makes a good salary and has saved
over $20,000. His company may transfer him to a new sales territory
within the next two years. What housing option would be best for him
based on this information?
|
| |
18. |
If your company does not
provide any type of 401(k) match, what is the best investment
option?
|
a. |
Invest the maximum amount allowed in a Roth
IRA, and then go back and fund the 401(k) to complete 15% of your
income. |
c. |
Contribute nothing into your 401(k), if
there is no match. |
|
b. |
Find another
job with a company that offers a retirement plan. |
d. |
Fully fund the
401(k) up to 15% of your
income. |
|
| |
19. |
What does a realtor have
available to them that the public doesn’t?
|
a. |
MLS |
c. |
All of the above |
|
b. |
Land
surveys |
d. |
Contacts |
|
| |
20. |
Who has the power to levy
taxes?
|
a. |
Congress |
c. |
the President |
|
b. |
the Internal
Revenue Service |
d. |
the Supreme
Court |
|
| |
21. |
How much money should
Lisa and Joe have in their emergency fund if they have a $3,000 credit
card bill and mortgage?
|
a. |
$1,000 |
c. |
10% of their credit card
balance |
|
b. |
3-6 months of
expenses |
d. |
No emergency
fund until the credit card is paid
off |
|
| |
22. |
What is the amount of
loss you must pay before the insurance company will pay the
rest?
|
a. |
premium |
c. |
deductible |
|
b. |
coverage
limit |
d. |
risk |
|
| |
23. |
In which case are you
most likely to get sued if you are behind in paying bills?
|
a. |
If
you call and settle the debt |
c. |
If
you are making no payments |
|
b. |
If you have
stopped all contact |
d. |
Both a and
b |
|
| |
24. |
Why should you avoid
lending money?
|
a. |
The person borrowing the money is in bondage
to you |
d. |
The relationship changes |
|
b. |
Both a and
b |
e. |
Often the
relationship ends completely |
|
c. |
All of the
above |
|
| |
25. |
When you are finished
comparing your bank statement to your account register, what do you often
discover?
|
a. |
Both a and b |
c. |
The balance is negative. |
|
b. |
The balance on
each is always the same. |
d. |
The balance on
each is different due to outstanding
checks. |
|
| |
26. |
Which is an advantage of
a Roth IRA?
|
a. |
Offers more choices |
c. |
Offers more flexibility |
|
b. |
All of the
above |
d. |
Higher bracket
at retirement |
|
| |
27. |
When seeking a financial
counselor to help you with your investments, always go with:
|
a. |
A
financial counselor with the heart of a teacher who explains
everything to you. |
c. |
A
financial counselor who is sophisticated and uses all of the right
vocabulary. |
|
b. |
A close family
member or friend because you will be helping each other
out. |
d. |
A financial
counselor who has at least five years
experience. |
|
| |
28. |
Which of the following is
a risk to consider when investing?
|
a. |
Inflation |
c. |
Your money is not liquid |
|
b. |
You could lose
all of your money |
d. |
All of the
above |
|
| |
29. |
Who completes Form
W-4?
|
a. |
employer |
c. |
IRS |
|
b. |
parents |
d. |
employee |
|
| |
30. |
An employer withholds
taxes from an employee’s ___.
|
a. |
lottery winnings |
c. |
interest and dividends |
|
b. |
holiday fruit
basket and turkey |
d. |
salaries and
wages |
|
| |
31. |
Which is a danger of
co-signing a loan?
|
a. |
You know them and trust them so co-signing
is not dangerous. |
c. |
If
the person doesn’t pay, you become responsible for the
debt. |
|
b. |
The bank
wouldn’t give that person a loan without your help. |
d. |
If the person
doesn’t pay, you are responsible for the
debt. |
|
| |
32. |
What is the best way to
buy a car?
|
a. |
0%
financing on new or used |
c. |
Leasing |
|
b. |
Purchase used
(two years or older) |
d. |
Purchase new
at the end of the year |
|
| |
33. |
Savings is
about:
|
a. |
Emotion and contentment |
c. |
Pride and greed |
|
b. |
Making more
money and discipline |
d. |
Contentment
and earning more money |
|
| |
34. |
Employers use which form
to compute the amount of federal income tax withheld?
|
a. |
Form 1040EZ |
c. |
Form W-2 |
|
b. |
Form
1040 |
d. |
Form
W-4 |
|
| |
35. |
With the money Erin
earned baby-sitting, she bought a book priced at $5.95. She paid a
tax of $.36 on the book. What type of tax did she pay?
|
a. |
excise tax |
d. |
income tax |
|
b. |
payroll
tax |
e. |
sales
tax |
|
c. |
property
tax |
|
| |
36. |
Which is not at true
statement about identity theft?
|
a. |
It
is often committed by someone the victim knew
personally. |
c. |
You should always shred documents that have
personal informaion on them. |
|
b. |
Carrying your
Social Security card in your wallet is a safety
precaution. |
d. |
It can happen
at restaurants, the mall, or a home
mailbox. |
|
| |
37. |
Which is not a horrible
mortgage option?
|
a. |
ARM |
c. |
Balloon |
|
b. |
Reverse
mortgage |
d. |
Conventional |
|
| |
38. |
Which is true about the
myth, “I will take out a 30-year mortgage and pay it off
early”?
|
a. |
All of the above |
c. |
Other important things come up and it
usually does not get paid off early. |
|
b. |
The monthly
payment on a 15-year mortgage is significantly more than a 30-year
mortgage. |
d. |
People
generally will pay it off early if they set that as a
goal. |
|
| |
39. |
What is the most sensible
way to buy a $4,000 car?
|
a. |
Ask your parents to co-sign a loan at
your local credit union. |
c. |
Shop around for the best interest rate
before taking out a $4,000 loan. |
|
b. |
Use the
sinking fund approach and save $400 a month for ten
months. |
d. |
Put a down
payment of $500 and use 90 days same-as-cash to pay the
balance. |
|
| |
40. |
Which of the following is
not a factor that affects property insurance cost?
|
a. |
gender |
c. |
coverage amount |
|
b. |
age of
structure |
d. |
location |
|
| |
41. |
For most people, federal
income tax is collected ___.
|
a. |
by
the Social Security Administration |
c. |
once every three months |
|
b. |
on a
pay-as-you-go basis |
d. |
yearly |
|
| |
42. |
Which is true about the
marketing of credit cards to teenagers?
|
a. |
Brand loyalty to your first card is
incredible, so credit card companies work hard to become the first
issuer. |
c. |
Teens are the number one target of credit
card companies across America. |
|
b. |
Colleges are
losing more students to credit card debt problems than to academic
failure. |
d. |
All of the
above |
|
| |
43. |
Long term care insurance
is for:
|
a. |
Assisted living facilities |
c. |
Nursing homes |
|
b. |
All of the
above |
d. |
In-home
care |
|
| |
44. |
Which of the following is
a step out of debt?
|
a. |
Quit borrowing money |
c. |
Sell something |
|
b. |
Using the debt
snowball |
d. |
All of the
above |
|
| |
45. |
The Wage and Tax
Statement is also known as ___.
|
a. |
Form W-2 |
c. |
Form 1040EZ |
|
b. |
Form
W-4 |
d. |
Form
1040 |
|
| |
46. |
Which of the following is
not reported on Form W-2?
|
a. |
Wages, tips, and other
compensation |
c. |
Federal income tax
withheld |
|
b. |
The number of
withholding allowances claimed by the employee on Form
$-4 |
d. |
Medicare tax
withheld |
|
| |
47. |
A good reason to get
long-term care insurance is:
|
a. |
69% of people over the age of 65 will
require long-term care. |
c. |
Medicare will not cover any expenses if you
were not eligible for Medicare at age 65. |
|
b. |
Nursing home
care can wipe out your savings. |
d. |
Both a and
b |
|
| |
48. |
To reclaim possession of
an item because the borrower failed to make payments:
|
a. |
Foreclosure |
c. |
Surrender of collateral |
|
b. |
Delinquency |
d. |
Repossession |
|
|
|
49. |
Justin has been working
at the same job for five years and recently finished his master’s degree
which entitles him to a promotion. He has saved $10,000 in the past
six months. What housing option would be best for him based on this
information?
|
| |
50. |
Which of the following
types of automobile insurance covers damage to the vehicle caused by
things other than a car accident (ex: theft, hail, or falling
tree)?
|
a. |
Comprehensive |
c. |
Property damage
liability |
|
b. |
Collision |
d. |
No-fault
|
|
| |
51. |
How much money should you
have in your emergency fund if you are working on Baby Step 2 (pay off all
debt)?
|
a. |
You should not have an emergency fund until
all debt is paid |
c. |
15% of your household
income |
|
b. |
$500-$1,000,
depending on your current income |
d. |
3-6 months of
expenses |
|
| |
52. |
Which is not a key to
saving money?
|
a. |
Making savings a habit and
priority |
c. |
Discipline |
|
b. |
Your
income |
d. |
Focus |
|
| |
53. |
If you borrow against
your retirement plan, under which conditions must you pay it
back?
|
a. |
All of the above |
c. |
You die |
|
b. |
If you leave
the company voluntarily |
d. |
If you are
forced to leave the company |
|
| |
54. |
Which is not part
of the debt snowball?
|
a. |
The minimum payment from a paid off debt
goes toward the new payment amount of the next
debt. |
c. |
Pay minimum on all debts except the smallest
one. |
|
b. |
List you debt
from highest interest rate to lowest interest rate. |
d. |
Put every
extra dollar you can on the smallest
debt |
|
| |
55. |
If you have $3,000
invested in a Roth IRA, what is true about your contribution?
|
a. |
You have maxed out your
contribution. |
c. |
You will pay taxes only on the growth of
$3,000. |
|
b. |
Both a and
b |
d. |
You have
already paid taxes on the money, so it will grow tax
free. |
|
| |
56. |
What type of insurance
covers a person for a specific period of time?
|
a. |
variable life insurance |
c. |
limited-payment life
insurance |
|
b. |
term life
insurance |
d. |
cash value
insurance (whole) |
|
| |
57. |
If you are married, which
is true of budgets?
|
a. |
Doing a budget will have no impact on your
marriage. |
c. |
The spouse who is not good with numbers
shouldn’t be involved in the budget. |
|
b. |
After the
first few budgets, the novelty will wear off and arguments will
gradually increase. |
d. |
The first few
budgets will result in arguments, but these will decrease over
time. |
|
| |
58. |
Even though a savings
account is fine when you are just beginning to save, why is a money market
a better place to keep your emergency fund?
|
a. |
A
money market is accessible and generally has check writing
privileges if needed. |
c. |
All of the above. |
|
b. |
Typically,
money markets average a higher interest rate than a savings
account. |
d. |
A savings
account is a bit too easy to
access. |
|
| |
59. |
The most aggressive
mutual funds tend to be from:
|
a. |
Companies that are overseas |
c. |
All of the above |
|
b. |
Companies that
are a little younger and growing |
d. |
Companies that
are older and
well-established |
|
| |
60. |
What is the amount you
pay for an insurance policy?
|
a. |
premium |
c. |
annuity |
|
b. |
monthly
payment |
d. |
annual
payment |
|
| |
61. |
Taxes on income, both
earned (salaries, wages, tips, commissions) and unearned (interest,
dividends) are __.
|
a. |
property taxes |
c. |
income taxes |
|
b. |
transaction
taxes |
d. |
none of the
above |
|
| |
62. |
Which factor doesn’t
affect your insurance premium?
|
a. |
hair color |
c. |
age |
|
b. |
urban/rural
area |
d. |
marital
status |
|
| |
63. |
Which of the following is
a peril not covered by homeowner’s policy?
|
a. |
fire |
c. |
parties |
|
b. |
theft |
d. |
smoke |
|
| |
64. |
Which of the following is
true about the concept of saving?
|
a. |
You will save when you make more
money. |
c. |
Saving must become a priority after all
bills are paid. |
|
b. |
All of the
above |
d. |
You must pay
yourself first. |
|
| |
65. |
Which is a reason why
people avoid making a budget?
|
a. |
fear of what they may find |
c. |
all of the above |
|
b. |
a budget has
been used to abuse them |
d. |
they never had
a budget that really worked |
|
| |
66. |
If you are struggling
financially and are behind on your bills, what should you budget
first?
|
a. |
food |
c. |
credit card |
|
b. |
clothing |
d. |
gas for the
car |
|
| |
67. |
Which statement is not
true about depreciation?
|
a. |
Depreciation doesn’t matter if you pay for
something using cash. |
c. |
A
new car loses 40% of its value in the first four
years. |
|
b. |
When buying
slightly used items, you minimize depreciation. |
d. |
Depreciation
and interest accounts for more than half the annual costs of owning
a car. |
|
| |
68. |
If you are buying a house
outside of a standard subdivision, what should you get?
|
a. |
Mortgage insurance |
c. |
Home warranty |
|
b. |
Land
survey |
d. |
PMI |
|
| |
69. |
Under which condition are
you not able to make a tax-free withdrawal from your Roth
IRA?
|
a. |
Over 59 and a one half years
old |
c. |
First-time home purchase up to
$10,000 |
|
b. |
Death or
disability |
d. |
Career change
and temporary drop of income |
|
| |
70. |
Which of the following
should you avoid buying?
|
a. |
Timeshares |
c. |
All of the above |
|
b. |
A house in the
bottom price range of the neighborhood |
d. |
A house near
the water |
|
| |
71. |
When buying a
home:
|
a. |
Overlook bad landscaping and outdated
cosmetic issues. |
c. |
Put at least 10% down. |
|
b. |
Buy in the
bottom price range of the neighborhood. |
d. |
All of the
above |
|
| |
72. |
Which type of mortgage is
the best to take out, particularly if you are going to be moving in five
to seven years?
|
a. |
Balloon Mortgage |
c. |
Fixed 15-year |
|
b. |
Fixed
30-year |
d. |
Adjustable
Rate Mortgage |
|
| |
73. |
Unearned income includes
___.
|
a. |
tips |
c. |
interest and dividends |
|
b. |
commissions |
d. |
salaries and
wages |
|
| |
74. |
A budget is:
|
a. |
all of the above |
c. |
being proactive with your
money |
|
b. |
a written
financial goal |
d. |
people telling
their money what to do |
|
| |
75. |
A collection of money
from different investors, which is used to purchase stocks, bonds, or
other investments, managed by a fund manager:
|
a. |
Company Stock |
c. |
Bonds |
|
b. |
Annuities |
d. |
Mutual
Funds |
|
| |
76. |
Which term is not
associated with balancing a checking account?
|
a. |
reconcile |
c. |
annual income |
|
b. |
withdrawal |
d. |
deposit |
|
| |
77. |
Why do ARMs appear to be
a good mortgage option?
|
a. |
The bank takes on the risk of higher
interest rate. |
c. |
Both a and c |
|
b. |
The initial
interest rate is lower; so people are able to buy the house they
want. |
d. |
The loan
adjusts to a lower interest rate as time
passes. |
|
| |
78. |
What of the following is
not a reason to save?
|
a. |
Wealth building |
c. |
Purchases |
|
b. |
Emergency
fund |
d. |
Pay off
debt |
|
| |
79. |
For most people,
(excluding students) a fully funded emergency fund will be
about:
|
a. |
$10,000-$15,000 |
c. |
$3,000-$5,000 |
|
b. |
$5,000-$10,000 |
d. |
$1,000 |
|
| |
80. |
Which of the following
will not likely lead to reduced insurance rates?
|
a. |
Driving an older car |
c. |
Speeding ticket |
|
b. |
Good
grades |
d. |
Shopping
around |
|
| |
81. |
Which of the following is
not one of the steps to take if you are a victim of identity
theft?
|
a. |
Contact the fraud victim division of each
credit bureau. |
c. |
Pay up to $50 to each account on which a
charge was made. |
|
b. |
All of the
above |
d. |
File a police
report. |
|
| |
82. |
If 80% of millionaires
are first generation rich, than one can conclude:
|
a. |
All of the above |
d. |
They started with nothing, made smart
decisions, and became millionaires |
|
b. |
The other 20%
are not millionaires |
e. |
They fell for
the myths that society lives by |
|
c. |
Both a and
b |
|
| |
83. |
Renter’s insurance covers
all of the following except?
|
a. |
loss of use of dwelling |
c. |
theft |
|
b. |
loss of
personal property |
d. |
structural
damage caused by
carelessness |
|
| |
84. |
Which of the following
should you consider when making a significant purchase?
|
a. |
If
you can’t pay cash, don’t buy it |
c. |
All of the above |
|
b. |
Your buying
motives |
d. |
The
opportunity cost |
|
| |
85. |
What does Baby Step 5 say
about saving for your children’s college?
|
a. |
Use pre-paid college
tuition |
c. |
Use insurance or savings
bonds |
|
b. |
Use a
Certificate of Deposit |
d. |
Use
tax-favored plans |
|
| |
86. |
If you must take a loan,
be sure to:
|
a. |
Get a home warranty |
c. |
Have a good paying job |
|
b. |
Get a fixed
rate |
d. |
Get a
survey |
|
| |
87. |
Which is true about
making purchases with credit cards?
|
a. |
You are more likely to experience the “pain”
when purchasing with a credit card. |
c. |
None of the above |
|
b. |
You spend
12-18% less when using a credit card. |
d. |
You spend
12-18% more when using a credit
card. |
|
| |
88. |
Which is an example of
using financing as a marketing tool?
|
a. |
90
days same-as-cash |
c. |
No
interest for two years |
|
b. |
Both a and
b |
d. |
Four-color
advertisement in Sunday’s
paper |
|
| |
89. |
What term refers to the
amount of tax that must be paid (total tax bill)?
|
a. |
tax credit |
c. |
tax liability |
|
b. |
tax
refund |
d. |
tax
deductions |
|
| |
90. |
Which of the following is
a good way to save for college?
|
a. |
Life insurance |
c. |
Pre-paid college tuition |
|
b. |
ESA |
d. |
Savings
bonds |
|
| |
91. |
Which of the following is
not true of a zero-based budget?
|
a. |
If
you have extra money left at the end of the month, your budget was
successful. |
c. |
You spend every dollar on paper before the
month begins. |
|
b. |
Use envelopes
for categories in which you tend to overspend. |
d. |
The money you
spend should equal the money you
earn. |
|
| |
92. |
Which statement best
describes a zero-based budget?
|
a. |
A
budget that has zero debt payments. |
c. |
Both a and c |
|
b. |
A perfect
month where you miss zero payments and save for your
retirement. |
d. |
Income minus
outgo equals zero. |
|
| |
93. |
The Baby Steps can best
be described as:
|
a. |
A
series of steps that will work in good times and in bad
times |
c. |
A
series of seven sequential steps that help you plan, save and manage
money |
|
b. |
All of the
above |
d. |
A systematic
process for getting out of a financial
mess |
|
| |
94. |
Which of the following by
itself is not a good reason to buy a house?
|
a. |
To
avoid paying rent |
c. |
A
mortgage is a tax advantage |
|
b. |
It can be a
good inflation hedge |
d. |
Everyone else
is |
|
| |
95. |
What type of insurance
should you buy to protect yourself against a question of
ownership?
|
a. |
Home warranty |
c. |
PMI |
|
b. |
Survey |
d. |
Title |
|
| |
96. |
Baby Step 2
is:
|
a. |
Save 15% of income for
retirement. |
c. |
Pay off all debt using the debt
snowball. |
|
b. |
Take a 15-year
vs. 30-year mortgage |
d. |
A fully funded
emergency fund. |
|
| |
97. |
Which of the following is
not covered under a bankruptcy?
|
a. |
Car loan |
c. |
Credit card debt |
|
b. |
Student
loans |
d. |
Medical
bills |
|
| |
98. |
Which statement is
not true about debt consolidation?
|
a. |
Your lower interest loans also get rolled
into the deal so you end up with minimal savings. |
c. |
You only have one payment to deal
with. |
|
b. |
Smaller
payments equals more time in debt. |
d. |
You end up
saving money because you are getting a lower interest
rate. |
|
| |
99. |
The KISS rule of
investing teaches:
|
a. |
It
is normal to have investments you don’t understand as long as you
have a broker. |
c. |
None of the above |
|
b. |
Keep things
simple and never buy anything you don’t understand. |
d. |
The more
sophisticated the investment, the
better. |
|
| |
100. |
If a taxpayer disagrees
with the IRS about tax liability after an examination or audit, the
taxpayer can ask the __ to review the case.
|
a. |
court |
c. |
state |
|
b. |
police |
d. |
Congress |
|